FNF - NYSE

Good morning, and welcome to Fidelity National Financial, Inc.'s Fourth Quarter and Full Year 2025 Earnings Call. During today's presentation, all callers will be placed in listen-only mode. Following management's prepared remarks, the conference will be opened for questions with instructions to follow at that time. I would now like to turn the call over to Lisa Foxworthy-Parker, Senior Vice President, Investor and External Relations. Please go ahead.

Thanks, operator, and welcome, everyone. I am joined today by Mike Nolan, CEO, and Anthony Park, CFO. We look forward to addressing your questions following our prepared remarks. F&G's management team, including Christopher Blunt, CEO, and Conor Murphy, President and CFO, will also be available for Q&A. Today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act, which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events, or changes in strategy. Please refer to our most recent quarterly and annual reports and other SEC filings for details on important factors that could cause actual results to differ materially from those expressed or implied. This morning's discussion also includes non-GAAP measures, which management believes are relevant in assessing the financial performance of the business. Non-GAAP measures have been reconciled to GAAP where required and in accordance with SEC rules within our earnings materials available on the company's investor website. Please note that today's call is being recorded and will be available for webcast replay. I will now turn the call over to Mike Nolan.

Thank you, Lisa, and good morning. The fourth quarter results rounded out an excellent year for our Title and F&G business both in terms of results and execution. Our Title business delivered outstanding results in the current environment. We had adjusted pretax Title earnings of $401,000,000 in the fourth quarter and $1,400,000,000 for the full year. This generated industry-leading adjusted pretax Title margins of 17.5% in the fourth quarter and 15.9% for the full year. Our fourth quarter results reflect strong performance across the business highlighted by exceptional strength in our direct commercial business. Additionally, our disciplined expense management drove strong incremental margins. Our achievements are a testament to our employees, the best Title professionals in the industry. I would like to extend a profound thanks for all that they do to consistently deliver industry-leading results, provide innovative solutions to our customers, and ensure secure and efficient real estate transactions.

We have transformed our business through decades of pioneering technology solutions and investments in the business, driving efficiencies, and helping Fidelity National Financial, Inc. maintain a competitive edge. As a result, we have expanded our margins over the last three years and significantly outperformed prior cyclical lows. 2025 was no exception, and we are excited to further enhance our industry-leading technology capabilities, which I will speak to further in a few minutes. Looking at our Title results more closely, on the purchase front, we are successfully navigating the low transactional environment, with purchase orders opened of 3,200 per day in the fourth quarter, in line with 2024 and reflecting normal seasonality. For the month of January, our daily purchase orders opened were up 1% versus the prior year and up 31% versus December. On the refinance front, volumes continue to be responsive as 30-year mortgage rates decreased during the fourth quarter. This generated refinance orders opened of 1,700 per day in the fourth quarter, up from 1,600 in the sequential quarter. Our refinance orders opened per day were up 38% over 2024, up 75% for the month of January versus the prior year, and up 28% for the month of January versus December. On the commercial front, we delivered direct commercial revenue of nearly $1,500,000,000 for the full year, which was our third-best year on record, trailing only the exceptional markets of 2021 and 2022. For the fourth quarter, direct commercial revenue was $479,000,000, a 27% increase over 2024. This was driven by a 33% increase in national revenues and a 20% increase in local revenues. National daily orders opened were up 9% over 2024, and local market daily orders opened were up 8% over 2024. Total commercial orders opened were 815 per day, up 8% over 2024, and up 11% for the month of January versus the prior year. We continue to see growth in commercial activity driven by a broad set of asset classes including industrial, multifamily, affordable housing, retail, and energy. This year's performance is especially notable given minimal contribution from the office sector, which remains subdued but is showing signs of improvement. We have also seen a 21% increase in commercial refinance orders opened for the full year 2025 over the prior year. Looking ahead, we have entered 2026 with a strong inventory of commercial deals to close, and the office sector is a potential added element as we move throughout the year. Overall, total orders opened averaged 5,300 per day in the fourth quarter, with October at 5,700, November at 5,600, and December at 4,600. For the month of January, total orders opened were 5,900 per day, up 29% over December. Our Title business is performing extremely well in what is still a low transactional environment. The National Association of Realtors, or NAR, has ranked 2025 home sales among the lowest levels since 1995 due to high mortgage rates and a housing shortage. Notably, the U.S. population has grown by over 70,000,000 people over the last three decades. According to NAR, home sales have been close to 4,000,000 per year since 2023, well short of the 5,100,000 average over the last thirty years. Over the next few years, we anticipate home sales will trend back toward the historical average. We are well positioned for the current market and poised to benefit from a potential turn in the housing market should mortgage rates drop further in 2026 and beyond. We remain bullish on the long-term prospects for the Title insurance business even in the current environment. Our disciplined operating model is centered on managing our business to the trend in open orders to deliver industry-leading results. Over the long term, this discipline has generated a steady level of free cash flow, allowing us to continuously invest in our business through attractive acquisitions and technology initiatives. We had a number of accomplishments in 2025, advancing our technology and innovation. To provide a few highlights, our inHere digital transaction platform has scaled to a fully deployed enterprise solution, engaging 80% of our residential sale transactions and reaching nearly 2,800,000 unique users throughout 2025, demonstrating deep integration into daily workflows. This foundational technology drives efficiency, transparency, and a superior customer experience in the escrow closing process with built-in compliance and enhanced fraud protection. We also expanded our identity verification processes and technology to streamline and secure customer authentication, helping combat the rise in impersonation and wire fraud in property sales. We rolled out AI tools enterprise-wide in 2025, deploying practical tools to enhance productivity and margin efficiency. We have made significant progress in building AI literacy across the company, and teams are using AI to streamline workflows, increase efficiency, and unlock new ways to better serve our customers. Finally, our curated data and technology touched over 90% of our total volume, supported by our proprietary title plans and patented title automation that is integrated into our centralized workflows. Our approach of leveraging title automation tools and data at scale has led to significant productivity improvements and been an important driver of our technology strategy. These successful investments in technology have played a critical role in our ability to maintain our industry-leading position for adjusted pretax Title margin. Over time, we believe that our ongoing investment in technology, combined with our robust curated data, will lead to increased efficiency and productivity in our operations that will continue to support our market-leading pretax Title margin. Turning now to our F&G segment. F&G's assets under management before flow reinsurance have grown to $73,100,000,000 at year end, up 12% over the prior year. On a stand-alone basis, F&G reported GAAP equity excluding AOCI of $6,000,000,000 at year end and has grown its book value per share excluding AOCI to $44.43, up 62% since the 2020 acquisition. On December 31, Fidelity National Financial, Inc. completed the distribution of approximately 12% of the outstanding shares of F&G's common stock to Fidelity National Financial, Inc. shareholders, returning approximately $500,000,000 of tangible value to Fidelity National Financial, Inc. shareholders. Following the distribution, Fidelity National Financial, Inc. retains control and majority ownership with approximately 70% of the outstanding shares in F&G. This has increased F&G's public float from approximately 18% to approximately 30% after the distribution, strengthening F&G's positioning within the equity markets and facilitating greater institutional ownership. This distribution reflects our confidence in F&G's long-term prospects and is intended to unlock shareholder value by enhancing market liquidity and broadening investor access to F&G's shares. F&G has increased its quarterly common stock dividend by 14% in the fourth quarter, supported by its strong and growing cash generation as it transitions to be more fee-based, higher margin, and less capital intensive. Going forward, expect F&G to be a meaningful source of capital to Fidelity National Financial, Inc. through its $112,000,000 annual common and preferred dividends, at the 70% ownership level, which indirectly benefits Fidelity National Financial, Inc. shareholders. With that, let me now turn the call over to Anthony Park to review Fidelity National Financial, Inc.'s fourth quarter and full-year financial performance and provide additional insights.

Thank you, Mike. Starting with our consolidated results, we generated fourth quarter total revenue of $4,100,000,000. Excluding net recognized gains and losses, our total revenue was $4,100,000,000 as compared with $4,000,000,000 in 2024. The net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether the securities were disposed of in the quarter or continue to be held in our investment portfolio. We reported a fourth quarter net loss of $117,000,000 including net recognized losses of $47,000,000 compared with net earnings of $450,000,000 including net recognized losses of $373,000,000 in 2024. Fourth quarter results include a $471,000,000 noncash deferred income tax charge resulting from our year-end distribution of F&G shares to Fidelity National Financial, Inc. shareholders, which reduced our ownership of F&G below 80%. This distribution triggered an accounting requirement to recognize a deferred tax liability on the accumulated difference between our book and tax basis in F&G. This noncash charge has no impact on our current cash position, operations, or liquidity and represents a potential future tax obligation that would arise only if we were to sell or distribute additional shares of F&G in the future. This item is excluded from adjusted net earnings, along with other mark-to-market effects and nonrecurring items. Adjusted net earnings were $382,000,000, or $1.41 per diluted share, compared with $366,000,000, or $1.34 per share, for 2024. The Title segment contributed $306,000,000, the F&G segment contributed $104,000,000, and the Corporate segment contributed $4,000,000 before eliminating $32,000,000 of dividend income from F&G in the consolidated financial statements. For the full year 2025, we saw strong performance for both the Title segment and the F&G segment, which together generated solid profitability. Total revenue, excluding gains and losses, was $500,000,000 in the full year 2025, and reflects a 7% increase over the full year 2024. We delivered $1,400,000,000 in adjusted net earnings, an increase of 7% over $1,300,000,000 in full year 2024. The Title segment contributed over $1,000,000,000, the F&G segment contributed $412,000,000, and the Corporate segment contributed $3,000,000 before eliminating $117,000,000 of dividend income from F&G in the consolidated financial statements. Turning to fourth quarter financial highlights specific to the Title segment, our Title segment generated $2,300,000,000 in total revenue in the fourth quarter, excluding net recognized losses of $58,000,000, compared with $2,100,000,000 in 2024. Direct premiums increased 21% over the prior year, agency premiums increased 7%, and escrow, title-related and other fees increased 9%. Personnel costs increased 12%, and other operating expenses increased 9%. All in, the Title business generated adjusted pretax Title earnings of $401,000,000 compared with $343,000,000 for 2024, and a 17.5% adjusted pretax Title margin for the quarter versus 16.6% in the prior-year quarter. As Mike said earlier, these results were driven by strong performance across the business as well as disciplined expense management. Our Title and Corporate investment portfolio totaled $4,900,000,000 at December 31. Interest and investment income in the Title and Corporate segments was $102,000,000, excluding income from F&G dividends to the holding company. This was down 6% from the prior-year quarter due to the impact of the Fed funds rate cuts throughout 2024 and 2025. Looking ahead, we expect a range of $95,000,000 to $100,000,000 in interest and investment income per quarter during 2026, assuming two 25 basis-point Fed rate cuts during the year. In addition, we expect approximately $112,000,000 of annual common and preferred dividend income from F&G to the Corporate segment. Our Title claims paid of $80,000,000 were $8,000,000 higher than our provision of $72,000,000 for the fourth quarter. The carried reserve for Title claim losses is approximately $34,000,000, or 2% above the 4.5% of total Title premiums. Next, turning to financial highlights specific to the F&G segment. Since F&G hosted its earnings call earlier this morning and provided a thorough update, I will provide a few key highlights. F&G's AUM before flow reinsurance increased to $73,100,000,000 at December 31, up 12% over the prior year. This includes retained assets under management of $57,600,000,000, up 7% over the prior year. F&G reported gross sales of $14,600,000,000 for the full year, including $3,400,000,000 in the fourth quarter. This marks one of our best sales years in history, driven by favorable market conditions and strong demand for retirement savings. F&G generated core sales of $9,000,000,000 for the full year, which includes indexed annuities, indexed life, and pension risk transfer, and had $5,600,000,000 of funding agreements and multiyear guaranteed annuities, two products we view as opportunistic depending on economics and market opportunity. F&G's net sales were $10,000,000,000 for the full year, including $2,300,000,000 in the fourth quarter. This reflects flow reinsurance at varying ceded amounts in line with capital targets for multiyear guaranteed annuities and fixed indexed annuities. Adjusted net earnings for the F&G segment were $412,000,000 for the full year. This included $104,000,000 of adjusted net earnings in 2025. F&G's operating performance from their underlying spread-based and fee-based businesses continues to be strong. F&G continues to provide an important complement to our Title business. The F&G segment contributed 30% of Fidelity National Financial, Inc.'s adjusted net earnings for the full year 2025, as compared to 38% in 2024, 30% in 2023, and 23% in 2022. From a capital and liquidity perspective, Fidelity National Financial, Inc. continues to maintain a strong balance sheet and balanced capital allocation strategy. Fidelity National Financial, Inc. has returned approximately $800,000,000 of capital to shareholders during the full year 2025. This reflects common dividends of $546,000,000 for the full year, including $140,000,000 in the fourth quarter, as well as share repurchases of $251,000,000 for the full year, including $30,000,000 in the fourth quarter. In November, our Board of Directors approved a 4% increase in the quarterly cash dividend to $0.52 per common share. From a capital allocation perspective, we ended 2024 with $786,000,000 in cash and short-term liquid investments at the holding company. During 2025, the business generated cash to fund our $550,000,000 common dividend, paid $75,000,000 of holding company interest expense, $150,000,000 investment in the F&G common equity raise, and $250,000,000 in share repurchases, all while keeping pace with wage inflation and funding the continued higher spend in risk and technology required in today's landscape. We ended the year with $659,000,000 in cash and short-term liquid investments at the holding company, which is about 85% of the amount held at year-end 2024. This concludes our prepared remarks, and let me now turn the call back to our operator for questions.

Thank you. And at this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press 2 if you would like to remove your question from the queue. One moment while we poll for questions. Our first question comes from Bose Thomas George with KBW. Please state your question.

The first question is just on the margin. You guys did a great 15.9% margin this year. You know, as you look into 2026, how do you see the margin trending? It looks like your guidance on interest income suggests that will not be really much of a headwind in this, given what you are seeing in commercial and residential. Just thoughts on the margin as we enter '26?

Sure, Bose. It is Mike, and good morning. I think our outlook on '26 is certainly more optimistic than when we came into '25. You know, the base case coming into '25 was pretty much like '24, and then we got outperformance in commercial and a little bit in refi, and good expense management to drive a nice beat over the prior year. The positive here is we are entering a year now where rates are in the low six or even six. I think I saw a headline today that said we are at the lowest rates we have had in the last three or four years, and I think that should drive more volume in purchase, which was flat in '25 over '24. So we would expect to see an uptick there. I think MBA and Fannie Mae are estimating about 10% more existing home sales in '26, and then the refi opportunity should be much better in '26 as well. And commercial should be as good or better. I think we have a lot of momentum still in commercial with orders up in the fourth quarter, up in January, and a nice pipeline as we go through the year.

Okay. Perfect. Thanks. And then actually, on the agent split, it looks like it went up a little bit this quarter or, I guess, declined in favor of the agents. So did that just reflect, like, a geographic mix, or was there something else to call out there?

Yeah. I do not think it moved too much. It was probably just geography there. We have been you know, we watch that pretty closely and actually have been very consistent for several years now. You might note that our agency premiums were not up as much as our direct premiums, and that is really more a function of the mix of business, the fact that we have a very strong commercial presence on the direct side. And we do on the agency side as well. But that delta, if you will, between, I do not know, a 21% increase in direct premiums and a 7% increase in agency is primarily related to commercial.

Okay. Great. That is helpful. Thanks a lot.

Thanks.

Your next question comes from Mark Douglas Hughes with Truist Securities. Please state your question.

Yeah. Thank you. Good afternoon. Good morning. In the commercial fee per file in '26 that you described, do you think it is as good or better overall for the coming year? Anything about the deal size that you are seeing in the pipeline that gives you some indication about fee per file?

Yeah, Mark. It is Mike. I would say that certainly in the fourth quarter, we saw bigger transactions that closed maybe vis-à-vis, you know, the fourth quarter of last year, and our national commercial fee per file was up significantly, as you know. I would say we still have nice deals in the pipeline that should generate strong fee per files. I did not I do not think I said that I expect the commercial fee per file in '26 to be as good or better. I think I said that that is a bit more of the wild card because you do not really know the mix. But there are a lot of good deals in the pipeline.

Yeah. Understood. I was referring to I think your overall guidance was as good or better in terms of the commercial volume. The inHere platform, you talked about, I think, 80% engagement. That has been I think last quarter, you might have said 85%, but assuming kind of relatively stable, do you think the engagement has kind of stabilized? Anything structural around those engagement numbers we should look for to hold steady or increase?

Yeah. Good question. I would expect them to increase. The engagement has been great. The goal is really to be over 90%. And the reason the numbers change around a bit, we were still migrating operations to the SoftPro platform as we went through the year, even through into the fourth quarter. And so as new operations get on, their engagement levels are lower, and then they build up over time. So in the operations that are a bit more mature on the platform, we are getting engagement plus 90%.

Yeah. Very good. And then finally, anything new on the regulatory front? On the pilot program or anything from the FHFA that you would throw out?

I would say it has been quiet. The pilot still exists. I have not heard a lot about what the plans are. It is my understanding it is set to expire in May, maybe gets extended. I do not think we know. But it just does not really seem to have impacted our deal flow, I would say, on the refi side.

Thank you very much.

Thanks, Mark.

To remove your question from the queue, you can press 2. Next question comes from Geoffrey Dunn with Deutsche Bank. Please state your question.

Just wanted to follow up on Bose's question. Hey. On the Title margin, you know, just given you ended the year so strong, do you still feel like that 15% to 20% normalized range is the right range, even with the AI efficiencies and the technology piece? Then sounds like just given the recent trends, you still think that '26 should continue moving closer towards the midpoint of that range if we assume Fannie and MBA forecast. Is that right?

Yeah, Mike. It is Mike. So, I would say long term, as we see the impacts of more efficiencies in AI and things like that, we might consider maybe not even long term, but we might consider changing the range. Right now, it still seems appropriate because even though we expect the year to be better, it is still a very volatile environment, I think, as we all know. And we are still at existing home sales at 30-year lows for the last three years. So you have got that as a backdrop. With improvement in volumes like the Fannie Mae and MBA forecast and more refi, I do think we could move into that more to that middle range of margin. But remember, we have got to get through the first quarter, and that is the historically soft quarter for the industry, and that always presents a little bit of a challenge around just where you can get on your full-year margin.

Got it. Thanks. And then I just wanted to check in on capital real quick. I know you and F&G both raised the dividend towards the end of the year. Could you just check back in on how you are thinking about capital allocation going forward and the types of businesses you might regularly be looking at from an M&A perspective?

Sure, Mike. This is Tony. I will start, Mike can pitch in. I mean, capital is pretty consistent in terms of what our normal capital allocation would be, which is the dividend, which to your point, we raised it in the fourth quarter as we typically do, and we expect to spend probably $560,000,000 or so in cash to pay our common dividend. Our interest expense runs about $75,000,000, so very modest there. Obviously, we are reinvesting in the business on a regular basis and continue to do that on the technology side and the efficiency side, and that really occurs before we even upstream anything to the holding company. And then beyond that, it becomes more opportunistic. We look at acquisitions, to your question, we look at stock buybacks. I expect us to be active in both of those areas. I think you will see more acquisition activity in '26 versus what we have seen in the last few years. I think that our cash flow has been strong. I think there are probably more opportunities in the title agent space and possibly some other areas as well. And then on the buyback front, we like to have a consistent cadence of buybacks as we work our way through the year when we are not blacked out. But we are also opportunistic, and to the extent we see weakness in the share price, I expect us to be more aggressive like we were back in the second quarter. I think overall, I think I mentioned earlier, we returned about $800,000,000 to shareholders in the form of dividends and buybacks in 2025. And I would expect another very strong cash flow generation year in 2026. Mike, I do not know if you wanted to touch on M&A at all, or are we good?

I would just agree. I think there will be more opportunities in the M&A space as we go into '26 and beyond. It has been fairly quiet for the past few years. So we are excited about some opportunities there.

Your next question comes from Jeffrey Dunn with Dowling & Partners. Please state your question.

Good morning. Good morning. Tony, what are your expectations for dividends up from operations in '26, both from regulated and unregulated?

The regulated number is probably in the $400,000,000 to $450,000,000 range. That one, because it is related to the prior-year results on a statutory basis, that one is certainly easier to estimate. The other operations is much more difficult. I think last year it was somewhere in the $600,000,000 or $650,000,000 range, and I would not be surprised to see that number or better in 2026. But, again, that is on real-time results, which obviously we would have to project that out.

Got it. And then just following up on M&A. Curious if there are any tech initiatives in the market that stand out as a need or opportunity and more attractive to buy than build.

Good question, Jeff. I would say from a tech stack standpoint, we feel comfortable about where we are at. We will be investing more in our SoftPro platform as we go forward, and obviously we have got the inHere really rolled out well. But if we saw things certainly in the tech space that would be helpful, we would buy it.

Does anything particular stand out on the back end? In terms of any need, I mean, for example, I think you have been renting your online notary services. You know, anything like that that makes more sense to bring in-house?

I do not really think so on the notary side. You have got various plug-ins there that we can take advantage of, and to own a notary company I do not think adds a lot of value, and then you are in some notary businesses typically that are not title-related, and you have got to think about whether you want to do that. So no. I think we are good in that space.

Okay. Thanks.

Thanks.

And this will conclude our question-and-answer session. I will now turn the conference back over to CEO Mike Nolan for closing remarks.

Thanks for joining our call this morning. We have delivered outstanding performance in 2025, with our complementary businesses executing well in the current market. The Title segment is performing well in what is still a low transactional environment and is capitalizing on stronger commercial activity. We are well positioned for the current market and remain poised to benefit from a potential turn in the housing market should mortgage rates drop further in 2026 and beyond. We remain bullish and continue to invest in the business for the long term while delivering industry-leading margins. Likewise, F&G is executing on its strategy that is focused on balancing continued growth in its spread-based business alongside the fee-based flow reinsurance, middle-market life insurance, and owned distribution strategies, as they focus on delivering long-term shareholder value. Thanks for your time this morning. We appreciate your interest in Fidelity National Financial, Inc., and look forward to updating you on our first quarter earnings call.